Nonresidential construction spending decreased 0.2% from April to May and is down 1.1% compared with May 2024, according to Associated Builders and Contractors.
For public construction, spending was unchanged for the month and is up 3.1% year to date. Private nonresidential spending decreased 0.4% from April to May and is down 3.9% year to date. Spending was down for the month in eight of the 16 nonresidential subcategories.
“Nonresidential construction spending declined for the fourth straight month in May,” said ABC Chief Economist Anirban Basu. “Private sector nonresidential activity remains particularly weak and is down nearly 7% from its January 2023 peak. Manufacturing investment, which increased more than 200% in recent years, has begun to fall and is now down more than 5% since its August 2024 peak. With the exception of data centers, on which spending increased another 1% in May, there are few categories with momentum.
“This decline in nonresidential activity was reflected in ABC’s Construction Backlog Indicator, which fell sharply in May,” Basu continued. “Given the many headwinds at play, including high interest rates, tight lending standards, elevated uncertainty and the effects of immigration and trade policy on labor and materials costs, spending may struggle to rebound during the second half of the year.”
